Lesson Plan: Trade Policy: Tariffs and Free Trade

What are Tariffs and How do They Work

Chad Bown, Senior Fellow at the Peterson Institution for International Economics, explained how tariffs work and some of their advantages and disadvantages. Using the example of President Trump's proposal for tariffs on steel and aluminum, he discussed the reason for and potential impacts of tariffs.

Description

The arguments over trade policy often revolve around the decision to either increase tariffs or move towards more free trade. This current discussion of protectionism relates to the Trump administration's renegotiation of NAFTA and imposition of tariffs on steel and aluminum. This lesson explains tariffs and has students explore the benefits and drawbacks of tariffs and free trade. This resources can be adapted to use in classes with one-to-one devices as well as a flipped classroom setting.

Procedures

  • WARM-UP:

    Before beginning class, have the students answer the following question as a warm-up. Discuss the warm-up question with the class when students have completed it.

    • How does international trade impact your life?
  • INTRODUCTION:

    As a class or individually, have the students view the clip below and answer the questions associated with it.

    Afterwards, review the students' responses to correct any misconceptions.

  • Video Clip: What are Tariffs and How do They Work (3:09)

    • Explain how tariffs work?

    • How can the lack of international competition impact prices in the United States?

    • Domestically, who benefits from tariffs? Who could tariffs be bad for?

    • Using the examples of tariffs on steel and aluminum, what reasons do people give for proposing new tariffs?

    • Using the examples of tariffs on steel and aluminum, what reasons are there for opposing new tariffs?
  • VOCABULARY:

    Either review or have the students define each of the following vocabulary terms before watching the videos in the lesson.

    • Tariffs
    • Protectionism
    • Imports
    • Exports
    • Free Trade
    • Protectionism
  • EXPLORATION:

    Students will answer the following writing prompt by viewing video clips associated with both sides of the argument.

    • Should the trade policy of the United States include additional tariffs or support free trade? Provide examples and details from the video clips.
  • Students should use the Trade Policy Notetaking Chart to take notes and organize their arguments.

  • APPLICATION:

    Using the notetaking chart, have students respond to the prompt by either providing a written response, debate or class discussion.

    • Should the trade policy of the United States include additional tariffs or support free trade? Provide examples and details from the video clips.
  • EXTENSION ACTIVITIES:

    Create a Tariff- Pick an imported good or resource and explain how a tariff on this item would impact on the economy. How would this impact prices, employment, and trade relationships?

  • EXTENSION ACTIVITIES:

    Research a Free Trade Agreement- Using the International Trade Administration website, research a country or region that the United States has a free trade agreement with. Identify what is traded and the terms of the agreement. Evaluate if this trade agreement is beneficial to the United States.

  • EXTENSION ACTIVITIES:

    Historical Tariffs- Pick one of the following tariffs. Summarize the terms of this tariff and evaluate its impact

    • Embargo Act of 1807

    • Tariff of Abominations (1828)

    • The McKinley Tariff (Tariff Act of 1890)

    • Smoot–Hawley Tariff Act (1930)
  • EXTENSION ACTIVITIES:

    Additional Writing Prompts-

    • Who should have the power to implement tariffs? Why?

    • How can tariffs impact specific regions of the United States?

    • What are trade deficits and how do they relate to economic growth?

Additional Resources

Vocabulary

  • Correlation
  • Demographics
  • Domestic
  • European Union
  • Export
  • Globalization
  • Gross Domestic Product
  • Heavy Industry
  • Import
  • Income Tax
  • Integrate
  • Leverage
  • Manufacturing
  • Markets
  • Milton Freidman
  • North American Free Trade Agreement
  • Premium
  • Protectionism
  • Recession
  • Regulations
  • Smoot - Hawley Tariff Act
  • Subsidize
  • Tariff
  • Trade Balance
  • Trade Deficit
  • Trade War
  • Volatility
  • White Collar

Topics

Economics & Financial LiteracyForeign PolicyGeography

Grades

High SchoolUniversity